Cryptos as Gold Substitutes

Jacob Moore: So what's your number, Bretton?
Bretton James: More
--Wall Street: Money Never Sleeps

We recently noted that gold bullion sales have been soft this year despite a sociopolitical environment often favorable for precious metals. One explanation is that cryptocurrencies such as Bitcoin are increasingly seen as a viable alternative currency to dollars, yen, euros, et al. And because they are perceived as having sound money properties, they are being purchased as a substitute for gold, thereby siphoning money away from bullion.

Yesterday, I heard a radio personality who has historically been bullish on gold recommending that his listeners should diversify their portfolios with some Bitcoin.

I have no doubt that this phenomenon has contributed to soft gold demand. I also have no doubt that the proposition that the cryptos are a sound money alternative to gold is wrong--something that we will discuss later.

Meanwhile, I personally welcome the current softness in gold prices as I am a net buyer. My constant fear is that gold prices will take off before I get done accumulating the metal in its various forms.

Of course, in this environment, I'm not sure my appetite for bullion can be sated. The rise of the cryptos has only intensified that feeling.

position in gold